Friday, May 27, 2016

Friday, May 27, 2016

Governor requests changes to budget; Business tax breaks stalled by governor; How safe is IBM? and; Housing “Out of Reach”

Governor requests changes to budget

Gov. John Bel Edwards’ administration asked the Senate Finance committee Thursday to strip all the changes the House made to the budget and start over. That means going back to the governor’s original budget proposal which leaves TOPS two-thirds shy of full funding and puts hospitals in Bogalusa, Alexandria, Lake Charles and Houma that care for the poor and uninsured at risk of closure. The House version of the budget avoided some cuts by diverting self-generated agency fees to the general fund, a move that some believe may be illegal. Should the Senate go along with the governor’s wishes, it raises the pressure on legislators to raise needed revenue in a June special session. Julia O’Donoghue, Times-Picayune has the details.


The Edwards administration also said the House budget would result in substantial cuts for services for people with disabilities. Additional budget reductions to the Department of Health and Hospitals would result in the elimination of four of six disability waivers that are used to pay for everything from a home health care worker to special equipment and medical care. “We ask you to consider starting over,” Dardenne told the Senate Finance Committee. … Dardenne said the overarching plan would not be for these cuts to TOPS and the hospitals to actually come to fruition. Instead, the Edwards administration would expect the Legislature to raise more money to cover these costs by eliminating tax breaks and raising taxes in a special fiscal session in June. The governor is expected to release more specifics about what type of tax code changes will be on the table in the next few days.


Business tax breaks stalled by governor

The state Board of Commerce and Industry (full disclosure: LBP Director Jan Moller is a member) stalled the approval of $208 million in property tax exemptions for manufacturing facilities Thursday. The exemption, which is constitutionally protected, allows manufacturers to escape property taxes for up to 10 years – robbing local governments of revenue needed for public schools and other services. The AP’s Melinda Deslatte writes that Gov. John Bel Edwards asked for the delay in order to review the exemption with the goal of possibly proposing changes.


Edwards spokesman Richard Carbo said the Democratic governor and his economic development secretary are devising new rules for reviewing such exemption requests.

“The governor does have final approval. However, given the volume of contracts to be considered and his intentions to reevaluate how these are awarded, the governor requested additional time to consult with the secretary of (Louisiana Economic Development) on changes to the process,” Carbo said in an email…Rep. Thomas Carmody, R-Shreveport, was one of the two votes in opposition to the delay…He said he hadn’t heard from the governor’s office ahead of time about the request to stall the applications and said he worried about the implications of the postponement. … Edwards, in office in January, has said government has been too generous in its tax break programs for businesses. He’s said tighter controls should be put in place and more analysis about the benefits versus costs should be done for the projects that receive tax breaks and the tax break programs themselves. The property tax breaks are slated to come up again at the Board of Commerce and Industry’s June 24 meeting.


How safe is IBM?

Under former Gov. Bobby Jindal, Louisiana invested $74 million to bring 800 jobs and IBM’s Client Innovation Center to Baton Rouge and 400 jobs to IBM’s Monroe facility. Now that investment may be in jeopardy as the company has announced it may cut 14,000 jobs because of financial decline. Columnist J.R. Ball of Times-Picayune wants to know if those job losses will affect Louisiana or if the company will stick to the deal that corporate welfare paid for.


Will any of these cuts, first reported in the Wall Street Journal, impact operations in Baton Rouge? Are any of the benchmarks IBM must hit to keep its corporate welfare in jeopardy? Is there concern about the company’s long-term future in Baton Rouge? These are all legitimate questions given how much money Baton Rouge and state government has invested in Big Blue. Those of us ultimately paying the freight, which would be the public, don’t know the answers. Maybe four years of financial declines by IBM isn’t impacting what the company is doing in Louisiana. Maybe IBM is on schedule, even ahead of schedule, when it comes to the creation of 800 promised Baton Rouge jobs. Maybe everything is sunshine and roses. Or maybe there’s trouble in taxpayer-funded paradise. Somebody knows the answers to these questions, but it’s not those of us footing IBM’s Baton Rouge bill. And that’s wrong.


Housing “Out of Reach”

A full time worker earning the minimum wage cannot afford a modest two-bedroom apartment in any state, metropolitan area  or county in this country. That’s according to the The National Low Income Housing Coalition’s report “Out of Reach.” Joe Davidson of the Washington Post has more.


To afford a two-bedroom apartment at the current federal minimum wage of $7.25 an hour, a worker would need to work 112 hours a week, every week, according to the report. That means workers “would have no remaining time during the week for anything other than working and sleeping.” The report looks at the annual income needed in each state and the District to afford a two bedroom apartment at the fair market rent, which is used by HUD to reflect the cost of utilities and housing. The coalition has recommendations to improve the situation, including one that would requiring cutting what has long been a sacred cow.


Number of the Day

900,000 – Additional number of seniors that would require HUD-subsidized housing by 2030 to keep pace with rising rents.  (Source: The Washington Post)